Boral (BLD)

Goldman Sachs has downgraded its recommendation on
Boral
to “neutral" from “buy" as well as removing the stock from its conviction list, saying the share price is unlikely to rise until the construction materials group restructures its business.

Boral’s share price has risen 35 per cent since late July but the broker reckons there is insufficient short-term upside potential to the stock to warrant a “buy" rating.

“In order to justify further upside for the BLD share price, we believe investors need to be convinced that the new MD, Mike Kane can drive significant profit enhancement through cost cutting and rationalisation.

“While we are encouraged by recent decisions such as the closure of the Waurn Ponds cement kilns, we prefer to await more detail of future plans before reconsidering the stock."

Goldman has a 12-month price target of $4.42 and is forecasting earnings per share growth of 24 per cent for the year to June 2013, and 87 per cent in 2014, to 17¢ and 32¢ respectively. Boral reported a 44 per cent fall in EPS in 2012 to 14¢.